Advantages and Disadvantages of Material Requirements Planning (MRP)
There are several advantages to the MRP process:
Assurance that materials and components will be available when needed
Minimized inventory levels and costs associated
Optimized inventory management
Reduced customer lead times
Increased manufacturing efficiency
Increased labor productivity
Increased overall customer satisfaction
Of course, there are also disadvantages to the MRP process:
Heavy reliance on input data accuracy (garbage in, garbage out)
MRP systems can often be difficult and expensive to implement
Lack of flexibility when it comes to the production schedule
Introduces the temptation to hold more inventory than needed
MRP Systems: Background
Material requirements planning was the earliest of the integrated information technology (IT) systems that aimed to improve productivity for businesses by using computers and software technology.
The first MRP systems of inventory management evolved in the 1940s and 1950s. They used mainframe computers to extrapolate information from a bill of materials for a specific finished product into a production and purchasing plan. Soon, MRP systems expanded to include information feedback loops so that production managers could change and update the system inputs as needed.
The next generation of MRP, manufacturing resources planning (MRP II), also incorporated marketing, finance, accounting, engineering, and human resources aspects into the planning process. A related concept that expands on MRP is enterprise resources planning (ERP), which uses computer technology to link the various functional areas across an entire business enterprise. As data analysis and technology became more sophisticated, more comprehensive systems were developed to integrate MRP with other aspects of the manufacturing process.
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